Negligence — Milk quota — Adverse decision of Milk Quota Tribunal — Whether tribunal erred in finding against plaintiffs — Whether defendant negligent in failing to advise remedy
On September
29 1983 the plaintiffs, who had previously run a diary herd of 100 cows on a
112-acre farm in Wiltshire, purchased Greys Green Farm, Oxfordshire, a 420-acre
farm that had not been used for diary purposes for 10 years. Between November
1983 and March 1984 the plaintiffs constructed a milking parlour, silage plant
and water supply at Greys Green Farm. Although some stock were moved to the
farm in December 1983, the milking herd of 102 cows and followers were moved on
April 4 1984 and the sale of the Wiltshire farm was completed on May 1 1984.
The Diary Produce Quotas Regulations 1984 (SI 1984 No 1047) gave effect to the
EEC Council Regulations 856/84 and 804/84, which imposed levies on milk
production above prescribed quotas as from April 1 1984. The plaintiffs
received a provisional assessment of primary milk quota calculated on the basis
of milk production on the Wiltshire farm, but none for Greys Green Farm. The
Diary Produce Quota Tribunal dismissed the reference to them of the plaintiffs’
claim for a development claim and an exceptional hardship claim for quota. The
plaintiffs obtained judgment on liability against the defendant in a claim for
damages for negligence by the defendant in failing to advise them that they had
the right to issue judicial review proceedings to challenge the decision of the
tribunal. On appeal the defendant contended that the judge misconstrued the
1984 regulations and regulation 857/84; made findings contrary to the weight of
the evidence; and misinterpreted his role in determining whether the plaintiffs
had suffered the loss of any chance to pursue a successful judicial review.
defendant was in breach of its duty of care in failing to advise about the
possibility of judicial review and the urgency of such application. The
tribunal erred in not giving reasons for its conclusions and for applying a
cut-off date of March 31 1985 for an exceptional hardship claim. The plaintiffs
were producers to whom article 4.1(c) of EEC Regulation 857/84 applied and were
not otherwise ineligible under those regulations to receive exceptional
hardship quota. The tribunal erred in law in finding that para 17(3)(a) and (b)
of Schedule 2 to the 1984 regulations were not satisfied in relation to the plaintiffs’
exceptional hardship claim; there was no cut-off date of March 31 1985 to
exceptional hardship claims. Had an application for judicial review been made
the Divisional Court would have exercised its discretion to remit the case to
the tribunal. The judge was wrong to have suggested a 60% chance of
establishing a claim to an exceptional hardship quota, this being a matter for
the quantification of damages.
The following
cases are referred to in this report.
Poyser
and Mills’ Arbitration, In re [1964] 2 QB 467;
[1963] 2 WLR 1309; [1963] 1 All ER 612; sub nom Poyser v Mills
[1963] EGD 421; (1963) 185 EG 609
R v Dairy Produce Quota Tribunal for England and Wales, ex parte
Caswell [1989] 2 EGLR 1; [1989] 26 EG 130, QB
R v Dairy Produce Quota Tribunal for England and Wales, ex parte
Caswell [1989] 1 WLR 1089; [1989] 3 All ER 205, CA
Stubbs
v Hunt & Wrigley [1992] 1 EGLR 17;
[1992] 20 EG 107
This was an
appeal from the judgment of Judge Bates QC (sitting as a judge of the High
Court), who on December 20 1991 gave judgment on liability in a claim for
damages by the plaintiffs, Alexander Robert Hood and Ann Marie Hood, against
the defendant, the National Farmers Union, for negligence: see [1992] 1 EGLR
175; [1992] 25 EG 135.
Stuart Isaacs
QC and Richard McManus (instructed by Lloyd Cooper) appeared for the appellant;
Alan Moses QC and Richard Gordon (instructed by Dawson & Co) represented
the respondents.
Giving the
judgment of the court, PETER GIBSON LJ said: This is an appeal by the
defendant, the National Farmers’ Union (‘the NFU’), from the order of Judge
Bates QC, sitting as a judge of the High Court in the Queen’s Bench Division,
who in an action brought by the plaintiffs, Mr and Mrs Hood, held on the trial
of a preliminary issue on the question of liability only that the NFU was
liable to them in negligence. Mr and Mrs Hood are dairy farmers and sought the
advice of the NFU in 1985 after they had been disappointed with the decision of
the Dairy Produce Quota Tribunal (‘the tribunal’) rejecting their exceptional
hardship claim to an additional milk quota. The learned judge held that the NFU
was negligent in respect of the advice which it had given them and that thereby
Mr and Mrs Hood had lost a 60% chance of establishing a claim to that quota.
Mr and Mrs
Hood have at all material times carried on their dairy farming business as
partners. Throughout the 1970s and until November 1983 they owned a farm of 112
acres, Archers Farm, Wiltshire, with about 100 dairy cows. The milk they
produced was sold to the Milk Marketing Board (‘the MMB’). Early in 1983 Mr
Hood came into a substantial inheritance and he and Mrs Hood looked for a
larger farm on which to continue their business. In June 1983 they contracted
to purchase, and on September 29 1983 they purchased, Greys Green Farm, near
Henley, Oxfordshire. This was a farm of some 420 acres for which they paid
£640,500 exclusive of the farmhouse. It had not been used for dairy farming for
some 10 years, but between November 1983 and March 1984 they spent £49,621.25
in constructing a milk parlour, silage plant and water supply and a further
£12,800 in sowing over 100 acres of grass leys and inseminating cows to produce
40 heifers. All with a view of expanding their herd; initially, they planned to
have 200 milking cows, but with longer-term plans to double that number. In
November 1983 they contracted to sell Archers Farm, but continued to keep their
herd there until the building work permitted the moving of the herd. On
December 27 1983, eight dry dairy cows and 20 calves were moved to Greys Green
Farm and the milking herd of 102 cows and 37 followers were moved on April 4
1984. The sale of Archers Farm was completed on May 1 1984. In the middle of
these major changes to their dairy farming business, Mr and Mrs Hood, like all
the other dairy farmers in the European Community, suddenly found themselves at
the beginning of April 1984 subject to drastic new rules intended to reduce
milk production.
On March 31
1984 the council of the European Communities adopted Council Regulation (EEC)
No 856/84 (‘Regulation 856/84’). This recited that the market in milk products
was suffering from structural surpluses as a result of an imbalance between
supply and demand and that although a uniform coresponsibly levy had been
applied, quantities of milk delivered were increasing at such a rate that
disposal of surpluses was imposing financial burdens and market difficulties,
which were jeopardising the very future of the Common Agricultural Policy.
Accordingly, the regulation, which came into force the next day, introduced an
a additional levy for an initial period of five years on quantities of milk
delivered by producers to purchasers in excess of what were called reference
quantities, but we would describe as quotas. A new article 5(c) was inserted in
Council Regulation (EEC) No 804/68 by article 1 of Regulation 856/84:
1. During
five consecutive periods of 12 months beginning on 1 April 1984, an additional
levy payable by producers or purchasers of cows’ milk shall be introduced. The
object of the said levy shall be to curb the increase in milk production while
at the same time permitting the structural developments and adjustments
required, having regard to the diversity of the situations among individual
Member States, regions and collection areas in the Community. However, the
first period shall start on 2 April 1984.
It was
provided that the legislation should be implemented in accordance with one of
two formulas, of which Formula B is the formula relevant to this case:
— A levy
shall be payable by every purchaser of milk or other milk products on the
quantities of milk or milk equivalent which have been delivered to him by a
producer and which, during the 12 months concerned, exceed a reference quantity
to be determined.
— The
purchaser able to the levy shall pass on the burden in the price paid to those
producers who have increased their deliveries, in proportion to their
contribution to the purchaser’s reference quantity being exceeded
The sum of the
reference quantities was not to exceed what was called a guaranteed total
quantity equal to the sum of quantities of milk being delivered to undertakings
treating or processing milk or other milk products in each member state during
1981 plus 1% and the guaranteed total quantity for the UK was specified as in
15,338,000 tonnes, which was increased to 15,698,000 tonnes for the period
April 2 1984 to March 31 1985. Also on April 31 1984 the Council of the
European Community adopted a further Regulation (EEC) No 857/84 (‘Regulation
857/84’) specifying rules for the application of the additional levy. This
regulation recited that the member states should be enabled to adapt the
reference quantities to take into account the special situations of certain
producers and to establish for this purpose, as necessary, a reserve within the
guaranteed total quantity and that the scheme must ‘as a matter of overwhelming
public interest’ enter into force on April 2 1984. By article 1 the levy was
fixed at no less than 100% of the target price for milk where Formula B was
applied. By article 2 the reference quantity of a purchaser of milk delivered
to him by a producer where Formula B applied could if the member state chose
(and as the UK in fact chose) be equal to the quantity of milk or milk equivalent
purchased by the purchaser during the 1983 calendar year weighted by a
specified percentage. Article 3 provided that for the determination of the
reference quantities certain special situations should be taken into account.
Producers who adopted milk production development plans (in accordance with a
particular directive (72/159/EEC)) lodged before March 1 1984 might obtain
special reference quantities. The final paragraph of article 3.1 also provided:
Investments
carried out without a development plan can also be taken into account if the
Member State has sufficient information.
Article 4, so
far is relevant, provided:
1. In order to complete the restructuring of
milk production at national or regional level or at the level of the collecting
areas, the Member States may, in connection with the application of formulas A
and B:
. . .
(b) grant an additional reference quantity to
producers realising a milk production development plan approved after the entry
into force of this Regulation under Directive 72/159/EEC, on condition that
this plan meets the criteria referred to in Article 1(2) of Regulation (EEC) No
1946/81;
(c) grant producers undertaking farming as their
main occupation an additional reference quantity, whether their herd fulfils
the conditions set out in paragraph (b) or not.
But by article
5 additional reference quantities could be granted only within the guaranteed
total quantity and were to be drawn from a reserve to be constituted by the
member state within the guaranteed total quantity. By article 12(c) ‘producer’
was defined as:
a natural or
legal person or group of natural or legal persons farming a holding located
within the geographical territory of the Community:
— selling
milk or other milk products directly to the consumer, and/or
— supplying
the purchaser
By article
12(d) ‘holding’ was defined as:
all the
production units operated by the producer and located within the geographical
territory of the Community.
Both
regulations were expressed to be directly applicable in all member states.
These regulations can be seen to have laid down the basic framework for the new
milk quota and additional levy system, imposing on each member state a maximum
amount of milk that could be produced annually by producers without incurring a
penal levy, but, subject to that maximum, leaving the member state some freedom
in the detailed applications of that system.
To implement
these regulations within the UK the Dairy Produce Quotas Regulations 1984 (SI
1984 No 1047), (‘the 1984 regulations’) were made on June 23 1984 and came into
operation the next day. Under these regulations three types of quotas might be
available to a producer: (1) primary wholesale quota (typically, equal to the
milk production in 1983 from the producer’s holding less 1%); (2) secondary
wholesale quota (so as far as relevant, a quota based on a producer’s expected
amount of milk production consequent on the producer’s reliance on an
investment of a capital nature made or contracted to be made before March 1
1984 and essential to the increase of milk intended to be delivered by him from
his holding); and (3) exceptional hardship quota. This quota could be allocated
in satisfaction of ‘exceptional hardship claims’. Such a claim was defined by
para 17(3) of Schedule 2 to the 1984 regulations as follows:
(3) An exceptional hardship claim shall be a
claim by a person to whom Article 4(i)(c) of Council Regulation 857/84
(which deals with producers undertaking farming as their main occupation)
applies that —
(a) before 2nd April 1984 he has entered into, or
become obliged to enter into, a transaction or made an arrangement —
. . . or
(ii) the reasonably expected outcome of which is a
level of wholesale delivery of dairy produce in respect of which, or a
substantial part of which, wholesale quota is not otherwise capable under these
regulations of being allocated to him
(b) at the time of entering into or being obliged
to enter into that transaction or making that arrangement, he intended to go
into or remain in business as a producer,
(c) he has not received, and will not receive or
become entitled to receive, as a result of that transaction or argument,
benefit reasonably commensurate with the want of wholesale quota to which his
exceptional hardship claim relates,
(d) as a result of the matters specified in the
preceding paragraphs of this subparagraph, he has suffered or will suffer
exceptional hardship in comparison with producers in general, and
(e) it is fair and reasonable that he should be
allocated wholesale quota as a result of his exceptional hardship claim.
When Mr and
Mrs Hood heard of the introduction of the new scheme of milk quotas, they found
themselves in very great uncertainty, committed as they were to moving their
dairy farming from the smaller Archers Farm to the much larger Greys Green Farm
in the purchase of which and on the development of which for increased milk
production they had incurred substantial expenditure. In April 1 1984 Mr and
Mrs Hood received a provisional assessment of primary wholesale quota of 439,222
litres calculated on the basis of their 1983 milk production from 90 cows at
Archers Farm with an average yield of 5,352 litres per cow. Had the new
purchasers of that farm been producers within the meaning of Regulation 857/84
and had they claimed in time, that quota would have belonged to them (see
article 7 of Regulation 857/84 and article 5.1 of Commission Regulation (EEC)
No 1371/84 Regulation 1371/84), but because those purchasers were not producers
and made no claim in time, Mr and Mrs Hood by an agreement with the MMB
pursuant to regulation 8 of the 1984 regulations retained that quota in
connection with Greys Green Farm. In August 1984 they made a claim for
secondary wholesale quota relying on the final paragraph of article 3.1 of
Regulation 857/84 and on their purchase and development of Greys Green Farm to
which they had committed themselves before the quota scheme came into force. In
the language of the 1984 regulations, this was a special case development
claim. They claimed a quota of 750,000 litres based on their expected milk
sales to the MMB between April 2 1984 and March 31 1985 from a herd which they
expected to be 150 cows at March 31 1984. They also made an application for
exceptional hardship quota.
A local panel
of the Dairy Produce Quota Tribunal on October 12 1984 assessed their secondary
wholesale quota at 220,164 litres. The exceptional hardship claim was passed to
the tribunal itself. Unfortunately for Mr and Mrs Hood they decided to appeal
to the tribunal against the local panel’s assessment of secondary wholesale
quota. They put in detailed written submissions alleging that they would suffer
exceptional hardship if they were not allocated quotas of 750,000 to 1,000,000
litres for a herd of 150 to 200 dairy cows. They appeared in person before the
tribunal at a brief oral hearing of both their appeal from the local panel and
of their application for exceptional hardship quota on December 12 1984. They
were asked about the number of milking cows which they then expected they would
have on March 31 1985 and told the tribunal they would have 115 cows. On
January 13 1985 the tribunal by a written decision reduced the secondary
wholesale quota assessment to 85,633 litres, being the increase in the number
of cows from the 1983 figure of 90 to the March 31 1985 figure of 115, viz
25, multiplied by the 1983 average yield of 5,352 litres per cow. That
increase, the tribunal held, was justified by the investment made by Mr and Mrs
Hood. By a further written decision on February 18 1985 the tribunal rejected
the exceptional hardship claim. It referred to their primary wholesale quota
and the reduced secondary wholesale quota, which it said was in respect of
their herd of 115 cows as forecast for March 31 1985. It referred to their
claim for an additional hardship quota and continued:
3. The
tribunal considers that the evidence does not establish that [Mr and Mrs Hood]
are suffering, or will suffer, exceptional hardship in comparison with milk
producers in general as a result of the imposition of milk quotas. On the basis
of their 1983 average yield they have sufficient quota for some 98 dairy cows.
4. The
tribunal hold that, on the evidence before it, none of the requirements of a
claim for additional quota as set out in provisions (a) to (e) of
subparagraph 17(3) of the second schedule to the [1984 regulations] is
satisfied in this case.
Mr and Mrs
Hood were unhappy with the way the oral hearing before the tribunal had been
conducted and even before the tribunal’s decisions were received they wrote to
the Country Landowners’ Association, giving details of their claims and of the
hearing before the tribunal and seeking advice on how to challenge a decision
of the tribunal.
On January 17
1985, they were advised by the association that the only possible way of
challenging the tribunal’s decision would be to apply for an order from the
High Court on the ground that the decision of the tribunal was not within its
statutory powers or that the requirements of the regulations had not been
complied with. But they were warned that the fact was that many dairy farmers
were angry and frustrated about not being able to get the quotas that they
expected to get, but that it did not follow that the tribunal had failed to act
within its statutory powers or that the requirement of the regulations had not
been complied with.
Discouraged by
that response but still dissatisfied, Mr and Mrs Hood then turned to the NFU,
which they had recently joined. They provided their local NFU group secretary,
Mr John Davis, with a copy of their letter to the Country Landowners’
Association. He referred the matter to the NFU’s county secretary, Mr William
Goldsworthy, who in turn took advice from a barrister in the NFU’s
headquarters, Miss Diane Smith. On February 6 Mr Goldsworthy wrote to Mr Davis,
repeating Miss Smith’s advice, save in one respect, and Mr Davis on February 12
1985, sent to Mr and Mrs Hood Mr Goldsworthy’s letter.
Miss Smith had
referred in her advice to an earlier advisory memorandum of which she was the
co-author and which had been sent to county secretaries. In that memorandum the
possibility of judicial review had been discussed and the comment was made:
‘time is very much of the essence in judicial review cases’. Mr Goldsworthy in
his letter raised the possibility of judicial review, but made no mention of
any time constraints. He mentioned that the NFU was taking one or two cases
through the courts to try and produce some kind of clarification. Mr
Goldsworthy was encouraging to the extent that he said that certain arguments
could be put forward by Mr and Mrs Hood. Mr Goldsworthy, on February 22 1985,
asked Miss Smith to re-examine the papers ‘in connection with the procedure to
a judiciary [sic] review’, which, he told her, Mr and Mrs Hood had decided that
they wanted. He said: ‘any help and guidance which we can give them in that
regard would be appreciated’. She replied on March 1 1985 that their case was
not suitable for judicial review and her advice was passed to Mr and Mrs Hood
on March 12 1985, as was a minute of Mr Goldsworthy in which he again referred
to the several cases the NFU was pursuing. But on the evidence it cannot be
doubted that Mr and Mrs Hood would have commenced judicial review proceedings
promptly, had they been told of the time-limits.
The main
contact between the NFU and Mr and Mrs Hood was through Mr Davis. As the
learned judge recorded:
Mr Davis said
that the impression he was left with from reading the opinions from the legal
division and from his discussions with Mr Goldsworthy was that there was no
immediate action which [Mr and Mrs Hood] could take to obtain redress but that
the NFU was taking a number of cases through the courts which might set a
precedent to enable [Mr and Mrs Hood] to make a successful claim at some time
in the future. This, he said, would have been the message which he would have
conveyed to the Hoods when he spoke to them, which he did at regular intervals.
And again:
Right up
until the time when Mr Hood consulted his own solicitors in June 1989, Mr Davis
said that he continued to be under the impression that there were still cases
going through the courts which could set a precedent for [Mr and Mrs Hood] to
follow. That is a message he said he would have continued to convey to Mr Hood
and, on their evidence, that was the impression and the message which [Mr and
Mrs Hood] received.
No mention was
ever made to Mr and Mrs Hood of the requirement (in RSC, Ord 53, r4) that an
application for leave to apply for judicial review should be made promptly and
in any event within three months from the decision sought to be impugned.
In June 1989
Mr Hood saw an article in a farming magazine about the Court of Appeal decision
in R v Dairy Produce Quota Tribunal for England and Wales, ex parte
Caswell [1989] 1 WLR 1089 and because certain facts in that case bore a
similarity to the present one,
applied for leave to apply for judicial review out-of-time, but that
application was refused on paper by Rose J and a renewed application for leave
was refused at an interpartes hearing by Pill J who held that there was no good
reason for extending time.
On July 31
1990, this action was commenced. On April 18 1991 Master Hodgson, by consent,
ordered that the question of liability be tried as a preliminary issue before
the question of quantum. At the trial of the preliminary issue the
learned judge held that Mr and Mrs Hood relied on the NFU for advice, but that
the NFU failed to advise them that to challenge the tribunal’s decision on
exceptional hardship quotas they had to proceed by way of judicial review
within three months of the date of the decision. He found that the NFU was
thereby in breach of its duty to exercise reasonable care and skill in the
advice which it gave and was liable in contract and in tort.
He further
held that Mr and Mrs Hood were entitled to make an exceptional hardship claim
because they were producers for the purposes of article 4.1(c) of Regulation
857/84 and he rejected the argument of the NFU that none of the requirements of
para 17(3)(b), (c), (d) and (e) was satisfied. He
found that the tribunal erred in law in three respects: (1) in failing to give
reasons, (2) in looking only to the period ending March 31 1985, and (3) in not
giving Mr and Mrs Hood a fair hearing.
He concluded:
Looking at all
the circumstances and putting myself in the position of the divisional court, I
have to ask whether the tribunal might not on a remitter have reached a
different conclusion properly directing themselves as to the law. The answer
is, that I think it would.
Further, I
consider that, on the remitter, there is notwithstanding the complexity of the
regulation, a substantial chance (say, 60%) of establishing a claim to
exceptional hardship quota.
The NFU
appeals on the ground essentially that the learned judge:
(1) misconstrued the 1984 regulations,
(2) misconstrued Regulation 857/84,
(3) in some instances (and in particular in
relation to the finding of negligence and in assessing at 60% the chance of
success) made findings which were contrary to the weight of the evidence, and
(4) misappreciated his role in determining
whether Mr and Mrs Hood had suffered the loss of any chance to pursue a
successful judicial review, in particular in assuming without explanation that
the court on an application for judicial review would have exercised its
discretion to intervene and to remit the matter to the tribunal.
Mr and Mrs
Hood, by their respondents’ notice, sought to support the learned judge’s
conclusion on additional grounds, but it has not proved necessary to go into
those further matters.
We have had
the benefit of admirable argument from Mr Stuart Isaacs QC, for the NFU, and Mr
Alan Moses QC, for Mr and Mrs Hood, and we are much indebted to them for
guiding us so skilfully and economically through the considerable complexities
of the community and domestic regulations. We confess that we are left with a
strong feeling of sympathy both with dairy farmers like the Hoods,
understandably concerned as they were when the new quota and levy system, to
which they had been subjected without warning, came into force, but left
without authoritative guidance, and also with the NFU, inundated as it was with
requests from farmers for assistance and advice at a time when so much was
uncertain.
Numerous
issues emerged in the course of argument, but it is convenient at this stage to
identify those which may call for decision for the resolution of this appeal.
The first issue is whether the NFU was negligent in not advising Mr and Mrs
Hood of the time-limits for judicial review. If it was negligent, that conclusion
would not avail the Hoods unless they establish that: (a) on a timeous
application by them for judicial review the divisional court would have acceded
to that application and remitted the exceptional hardship claim for a rehearing
by the tribunal; and (b) there is more than a negligible chance that the
tribunal would have awarded exceptional hardship quotas to them.
Mr Moses
submitted that the application for judicial review would have succeeded because
of the number of errors of law by the tribunal including: (i) a failure to give
reasons; (ii) the adoption of a cut-off date of March 31 1985 for an
exceptional hardship award; and (iii) the holding that none of the requirements
of subparas (a) to (e) of para 17(3) of Schedule 2 to the 1984
regulations are satisfied.
Mr Isaacs
challenged the factual basis of (i) and (iii), and submitted that Mr and Mrs
Hood were not eligible for exceptional hardship quota, first because they were
not ‘producers’ to whom article 4.1(c) of Regulation 857/84 applied for the purposes
of para 17(3) and, second because they had no entitlement to primary wholesale
quota which was, he said, a prerequisite to the grant of exceptional hardship
quota. The first submission and, unless the Hoods had a primary wholesale quota
entitlement, the second, raise questions of interpretation of Regulation 857/84
and it is common ground that unless this court is of the view that the
interpretation is clear and free from doubt, the possibility of the necessity
of a reference to the European Court of Justice under article 177 of the Treaty
of Rome arises.
Mr Isaacs
further submitted that the tribunal was right to conclude that none of subparas
(a) to (e) of para 17(3) was satisfied. He also submitted that it
was a separate question, not addressed by the learned judge, whether the
divisional court would have exercised its discretion to order a remittal.
Finally, both
sides presented submissions on whether the learned judge was right to make an
assessment in percentage terms of the chance which the Hoods claim to have lost
in consequence of the NFU’s negligence.
We propose to
deal with the issues in the following order:
(1) Was the NFU negligent?
(2) Did the tribunal —
(a) fail to give reasons, and/or
(b) apply a cut-off date of March 31 1985 and so
err in law?
(3) Is it clear and free from doubt that the
Hoods were or were not eligible under Regulation 857/84 and, if not, should
this court refer the question to the European Court of Justice?
(4) Did subparas (a) and (b) of
para 17(3) (which largely turn on a question of law) apply to the circumstances
of Mr and Mrs Hood?
(5) Did Mr and Mrs Hood have no chance or a
chance which is more than negligible of establishing before the tribunal at a
rehearing that subparas (c), (d) and (e) of para 17(3),
(which depend largely on value judgment by the tribunal) apply to their
circumstances?
(6) Would the divisional court have remitted the
case to the tribunal for a rehearing?
(7) Was the learned judge correct in assessing
that Mr and Mrs Hood lost a 60% chance of establishing a claim to exceptional
hardship quota?
1 Negligence
It was common
ground between the parties that: (1) the NFU held itself out as competent to
advise Mr and Mrs Hood as to the consequences and legal effect of the
tribunal’s decision and as to whether it could and should be challenged and
knew that they relied on such advice; (2) the NFU owed them a duty to so advise
them with reasonable care and skill; but (3) the NFU was not acting as their
solicitors. The crucial question is as to the scope of the duty assumed by the
NFU: did it extend to advising Mr and Mrs Hood on the procedure for alleging
the decision of the tribunal on the exceptional hardship claim? Mr Isaacs submits that it did not. He contends
that it is Miss Smith’s perception of what she was asked to advise (viz
on whether secondary wholesale quota was available in respect of development
not completed by March 31 1985) and of the likely outcome of proceedings for
judicial review (viz that no more quota would have been allocated) which
is relevant and that unless it can be established that that perception on the
material out before her was negligent, it is immaterial that her advice about
time being of the essence in judicial review proceedings was not communicated
to the Hoods. He further relied on what he described as Mr Goldsworthy’s honest
impression that Mr Hood knew that applications for judicial
that the Hoods had solicitors acting for them.
We cannot
accept these submissions. The perception of Miss Smith, whom no one has
criticised, and the impression and belief of Mr Goldsworthy seem to me to be
nothing to the point, and in any event the learned judge did not accept the
evidence of Mr Goldsworthy on his impression of Mr Hood’s knowledge of judicial
review. The question is whether the NFU was negligent. Mr Hood, who was
accepted by the learned judge as a witness of truth, referred in his witness
statement to telling Mr Davis of his dissatisfaction with the tribunal’s
decision on the exceptional hardship claim and said:
I told Mr
Davis that we needed the expertise of the NFU to guide and advise us on how to
challenge the tribunal’s decision.
Mr Davis in
his witness statement (and it must be remembered that he was the NFU official
who had direct contact with the Hoods) said that it was clear to him that so
far as their milk quota problem was concerned they were expecting the NFU to
advise them on their rights and remedies.
We have
already referred to Mr Goldsworthy’s minute of February 22 1985 to Miss Smith
in which he reveals his awareness of what and guidance Mr and Mrs Hood wanted.
And yet the NFU, while accepting the role of adviser to give that help and
guidance, failed to advise them of the time-limits for judicial review. Indeed,
the NFU by raising false hopes that there were cases which it would be pursuing
through the courts and which might assist the Hoods implied that they need not
get on with judicial review proceedings. In our judgment, the learned judge’s
findings of fact, to which we have already referred, leading to his conclusion
that the NFU in breach of its duty failed to exercise reasonable care and skill
in the advice which it gave, are unassailable, as is that conclusion.
2 Error of law by the tribunal
It is common
ground that there was a duty on the tribunal to give reasons (see section 12(1)
of Tribunals and Inquiries Act 1971) as Megaw J said In Re Poyser and Mills’
Arbitration [1964] 2 QB 467 at p478:
Parliament
provided that reasons shall be given, and in my view that must be read as
meaning that proper, adequate reasons must be given. The reasons that are set
out must be reasons which will not only be intelligible, but which deal with
the substantial points that have been raised.
Mr and Mrs
Hood had set out in a detailed document supplied to the tribunal why in their
submission each of the conditions for exceptional hardship quota was satisfied.
Mr Isaacs submitted that adequate reasons were given for the rejection of their
claim because in each of paras 3 and 4 of the tribunal’s decision, which we
have already cited, it is made clear that the basis of the decision is the
evidence before the tribunal. For our part we think that Mr Moses was entirely
correct in saying that the tribunal stated its conclusions but, save possibly
for the second sentence in para 3, no reasons for those conclusions. We do not
doubt that the tribunal was under heavy pressure of work at the time, but we
regret to have to say that it erred in failing to give an adequate explanation
of its decision and to deal with the substantial points raised.
It is also
common ground that, as Popplewell J held in R v Dairy Produce Quota
Tribunal for England & Wales, ex parte Caswell November 23 1988*, on
the true construction of the 1984 regulations is for the purposes of an
exceptional hardship claim there was no applicable cut-off date of March 31
1985. Mr Isaacs disputes that the tribunal did apply such a cut-off date in the
present case, and it is correct that the only express reference to that date is
in relation to the factual recitation of the forecast size of the herd which
explained the secondary wholesale quota assessment. But there is nothing to
explain why the planned increase in the herd after March 31 1985 had no effect
on the outcome of the application and it is clear from the Caswell case,
decided as it was by the tribunal only five days before the decision on the
exceptional hardship claim in the present case, that the tribunal had taken the
view that it was appropriate to apply a cut-off date of March 31 1985 for such
a claim. It is beyond belief that the tribunal would apply a different
interpretation of the 1984 regulations so shortly after it had decided the Caswell
case. We are prepared to infer that the tribunal erred in law on this point
also.
*Editor’s
note: Reported at [1989] 2 EGLR 1.
Eligibility
under Regulation 857/84
To be eligible
for exceptional hardship quota, para 17(3) requires that the claimant must be a
person to whom article 4.1(c) of Regulation 857/84 applies. Mr Isaacs
submitted, and Mr Moses was content to accept, that that requirement needed to
be satisfied at April 2 1984, when the milk quota and additional levy scheme
came into force.
Mr Moses
contended that Mr and Mrs Hood were ‘producers undertaking farming as their
main occupation’ and that by reason of the definitions of ‘producer’ and
‘holding on’ in article 12 they were such producers as being persons farming a
production unit, viz Archers Farm, operated by them on that day and located
within the community. That is the literal construction which found favour with
the learned judge.
Mr Isaacs’
contention was that to be a person to whom article 4.1(c) applies, the producer
must be farming the production unit in respect of which the additional
reference quota is claimed. He submitted that this is the construction of
article 4.1(c) which should be adopted in accordance with the purposive
approach applicable to the interpretation of community legislation. The purpose
of the scheme was, he said, to curb the increase in milk production and he
argued that the literal construction ran counter to that purpose as it would
have the effect of increasing the acreage devoted to dairy production and would
therefore encourage rather than discourage milk production, both the vendor and
the purchaser of a holding being able to base a claim for quota on the same
holding. He referred us to a number of decisions of the European Court to
illustrate the adoption of that purposive approach in construing community
provisions restrictively, but we were shown no authority that is directly in
point on the provisions we are asked to construe.
Both Mr Moses
and Mr Isaacs contended that his construction was so clearly correct that if a
decision on this question of community law is necessary to enable the court to
give judgment, it is nevertheless not necessary to refer the question to the
European Court of Justice. We have considered anxiously whether the point raised
is so clear and free from doubt that this court itself can properly decide it
without a reference, but we have reached the firm conclusion that the literal
construction is manifestly correct.
The
construction advanced by Mr Isaacs seems to me to involve implying a
qualification on the words used in article 4.1(c) when read with article 12,
for which we can see no justification. The literal construction does not lead
to an increase in milk production. Those who are eligible under article 4.1(c)
for additional reference quantities, if a member state chooses to grant them,
can only receive quotas out of the reserve referred to in article 5 and that
will not raise the guaranteed total quantity of the member state. The stated
purpose of article 4 was to complete the restricting of milk production and
that article recognised that there were exceptional situations when it might be
appropriate to allow a member state to grant additional quotas.
In our view,
it would be anomalous and grossly unfair if dairy farmers like the Hoods, who
had produced milk for years (including the year the milk production in which
was taken into account for the purpose of the guaranteed total quantity), who
were producing milk on April 2 1984 and who, well before the scheme came into
force, had incurred significant expenditure with a view to continuing and
increasing milk production, should be wholly ineligible for the additional
quotas contemplated. The question we are concerned with at this stage is
eligibility, not with the allocation of quotas. The need for specific rules to
govern transfers of holdings and reallocations was recognised and met: see
articles 7 and 8 of Regulation 857/84 and
is no possibility of two quotas being granted in respect of the same holding
(in the sense that the quota for the same holding could be enjoyed at one and
the same time by a transferor and a transferee). But we see no difficulty in
eligibility being founded for both a transferor and a transferee in respect of
the same land, as that is what justice may demand in an unusual set of
circumstances such as that which obtains here. In our judgment therefore, the
literal construction is plainly correct and we can so decide without requesting
a ruling of the European Court of Justice.
Is it
necessary as a matter of construction of Regulation 857/84, for a producer to
be entitled to primary wholesale quota if he is to be eligible to receive an
‘additional reference quantity’? The argument
turns on the meaning of ‘additional’. Mr Isaacs, relying on the decision of
Phillips J in Stubbs v National Farmers Union (June 11 1991)* to
the effect that the producer must be so entitled, answers that question in the
affirmative. Mr Moses answers it in the negative, contending that additional
means no more than ‘another’. We see considerable force in this contention of
Mr Moses, but it is unnecessary to decide this question of construction, as in
any event the Hoods were entitled to, albeit initially defeasibly, and did
receive primary wholesale quota.
*Editor’s
note: sub nom Stubbs v Hunt & Wrigley [1992] 1 EGLR 17.
In our
judgment, therefore, it is clear that Mr and Mrs Hood were producers to whom
article 4.1(c) applied and were not otherwise ineligible under Regulation
857/84 to receive exceptional hardship quota.
4 Para 17(3), (a) and (b)
Mr and Mrs
Hood claim that before April 2 1984 they entered into a transaction or made an
arrangement, viz the purchase and development of Greys Green Farm, the
reasonably expected outcome of which was a level of wholesale delivery of dairy
produce, viz between 750,000 and 1m litres from 150 to 200 cows, in
respect of a substantial part of which, viz that quantity less the
primary and secondary wholesale quota as totalling 524,865 litres, wholesale
quota was not otherwise capable upper the 1984 regulations of being allocated
to them.
Mr Isaacs
submitted that as the transaction or arrangement is the same transaction or
arrangement relied on by the Hoods for their secondary wholesale quota claim in
respect of which they had received quota, quota was capable of being allocated
in respect of the entire expected level of wholesale delivery, and so the claim
for exceptional hardship quota should have been rejected in limine. But
that, in our view, deprives the words a substantial part of which of any
meaning. Subpara (a) must contemplate that there being be a situation in
which quota is allocated or is capable of being allocated in respect of milk
production consequent on a development plan and yet the same development plan
can found a claim to exceptional hardship quota in respect of further amounts
of milk production.
On Mr Moses’
construction of the regulations, it is explicable on the basis that there is a
cut-off date of March 31 1985 for secondary wholesale milk quota whereas there
is no such cut-off date for the exceptional hardship quota. For this he relies
on what was said by Popplewell J in the Caswell case to that effect.
To understand
this point, we must refer to the relevant parts of the 1984 regulations.
Secondary wholesale quota can be allocated pursuant to a special case claim
made by an applicant in accordance with para 7 of Schedule 2 to the 1984
regulations. By para 8(1) each special case claim is to be examined by the
minister who, shall accept or reject it in accordance with the other provisions
of para 8. By subpara (2) he is to accept it only if, inter alia, it is
a development claim and he is satisfied that the applicant may be entitled to
secondary wholesale quota. A development claim is defined in regulation 2(1) of
the 1984 regulations as meaning a special case claim based on article 3.1 of
Regulation 857/84 submitted by a producer in respect of investments of a
capital nature on his holding calculated to achieve an average monthly quantity
of milk production on his holding greater by a specified certificates adjourn
than the average of his milk production taken from each month of the period
with reference to which his primary wholesale quota was estimated. By Schedule
2, para 8(4):
A development
claim shall be accepted by the Minister only if it contained the following
particulars from the applicant —
(a) the subparagraph of Article 3(1) of . . .
Regulation 857/84 on which he relies;
(b) evidence that his reliance is based on an
investment of a capital nature (which was made or in respect of which an
obligation was entered into before March 1st 1984) essential to the increase of
dairy produce intended by him to be delivered by wholesale delivery from his
holding;
(c) the total quantity of dairy produce which he
expects to sell by direct sale or deliver by wholesale delivery from his
holding in the first quota year; and
(d) his secondary wholesale quota claim, being a
specified quantity of dairy produce equal to that percentage of the quantity of
dairy produce claimed by him as his development quantity in relation to his
holding which he does not claim as secondary direct sales quota.
By regulation
2(1)
‘development
quantity’ means the quantity of milk calculated, by reference to the increase
from a producer’s annualised quantity (that is to say his average monthly
quantity of milk production, in any base period applicable to him, multiplied
by 12) to the quantity of milk reasonably expected to be produced on his
holding in the first quota year, by taking, in respect of any expected
increased quantity
— certain
specified amounts, special case claims which are not rejected have to be
reserved for further examination and by Schedule 2, para 9(3):
The estimate
of a secondary wholesale quota of each applicant shall be —
(a) such quantity of dairy produce (if any) as is
considered by the further examination body to be justified by his special case
claim, or
(b) his secondary wholesale quota claim —
Whichever is
the less.
The claimant
can cause his claim to be determined by the tribunal and by para 10(1) the
tribunal shall determine the secondary wholesale quota in accordance with
provisions similar to those in para 9(3).
It will be
noted that by para 8(4)(c) and (through the references to ‘development
quantity’), (d) there are two references to the first quota year and it
was after alluding to the definition of development quantity that Popplewell J
commented in respect of the development claim: ‘it is obviously geared to the
year ending 31 March 1985’. With that he contrasted the provisions relating to
exceptional hardship quota.
Mr Isaacs, in
his reply, pointed out that Popplewell J was wrong to suggest that there was
such a cut-off date for a development claim. He said that it did not follow
that because particulars relating to the first quota year had to be supplied to
the minister, attention had to be confined to that period and he submitted that
there was nothing in para 9(3) or 10(1) to limit the further examination body
or the tribunal to consider the period up to March 31 1985 only and instead
they were required to consider that what was justified by the development plan.
We cannot
accept Mr Isaac’s submissions. It would be remarkable if the particulars to be
supplied to the minister did not contain all the information needed to
determine the secondary wholesale quota and there is nothing in para 8(4) to
suggest that the applicant should supply information relating to what was
expected to happen after the end of the first quota year. Equally for the
purpose of paras 9(3) and 10(1) it would be surprising if what could be
justified by the special case claim was on a different basis from that on which
the secondary wholesale quota claim had been made. In our judgment, therefore,
a cut-off date of March 31 1985 applies to secondary wholesale quota. We are
the happier to have reached this conclusion for two reasons. First, it appears
to have been the practice of the tribunal not to look beyond March 31 1985 and
the practice will have been confirmed by the Caswell case. It is very
likely therefore, that numerous determinations will have been made on that
basis and we would be reluctant at this late stage in the history of secondary
wholesale quota to declare the
Second, it is singularly unattractive for the NFU now to advance the argument
propounded on its behalf, the implication of it being that the tribunal was
wrong in its approach to the assessment of secondary wholesale quota for the
Hoods and yet the NFU failed to advise the Hoods to seek a judicial review of
that decision by the tribunal.
We therefore
conclude that subpara (a) of para 17(3) applies to the circumstances of
Mr and Mrs Hood, and, as we understand him, Mr Isaacs accepts that if the
requirements of subpara (a) are satisfied, so on the facts are the
requirements of subpara (b). It follows that the tribunal erred in law
in its holding to the contrary.
5 Para 17(3), (c), (d) and (e)
These subparagraphs
impose conditions requiring the the tribunal to make a value judgment as to
whether the Hoods became entitled to receive benefit ‘reasonably commensurate’
with the want of wholesale quota to which their exceptional hardship claim
related, whether they suffered ‘exceptional hardship in comparison with
producers in general’ and whether it is ‘fair and reasonable’ that they should
be allocated wholesale quota as a result of that claim. At this stage the court
is only considering the preliminary issue of liability and it is sufficient to
say that we are satisfied on all the evidence put before the court that Mr and
Mrs Hood had more than a negligible chance that they would have established at
a rehearing those subparagraphs applied to their circumstances.
In view of the
tribunal’s errors: (i) in its construction of subparas (a) and (b) and (ii) in
its application of a cut-off date of March 31 1985 to exceptional hardship
claims, its consideration of subparas (c), (d) and (e)
would appear to have been vitiated, and certainly the way the tribunal
expressed itself in the decision is insufficient to establish the contrary.
6 Remittal
In the light
of the conclusions that the tribunal erred in law in failing to give reasons,
in applying a cut-off date of March 31 1985 to the exceptional hardship claim
and in its construction and application of para 17, there being be no question
but that the Divisional Court, had an application for judicial review been made
in time, would have exercised its discretion to remit the case to the tribunal
for a rehearing.
7 Assessment of the lost chance
Both sides
made submissions on the meaning and effect of the learned judge’s holding that
there was ‘a substantial chance (say 60%) of establishing a claim to
exceptional hardship quota’. With all respect to the learned judge, he was
ill-advised to suggest any figure, that being a matter for the later stage of
the action when damages will be quantified. Both Mr Isaacs and Mr Moses
helpfully agreed that if the court concluded that the Hoods had lost a more
than negligible chance of establishing a claim to exceptional hardship quota,
it should so declare without quantifying the chance. Indeed, for the avoidance
of doubt we would wish to make clear that in assessing the lost chance as more
than negligible we do not thereby intend to trench in any way on the freedom of
the trial judge to quantify the damages as he sees fit in the light of the
evidence put before him.
We dismiss
this appeal.
Appeal
dismissed.
